NU Online News Service, Nov. 3, 2003, 2:37 p.m. EST – The Michigan Senate has voted 37-0 to pass a revised version of House Bill 4907, a bill that would let life insurance policyholders take out a higher percentage of the death benefit before death than is currently allowed.
House Bill 4907, sponsored by Rep. John Stahl, R-North Branch, Mich., amends the insurance code to revise provisions regulating accelerated benefits from life insurance policies. These are benefits paid before death, rather than upon death, in specifically permitted circumstances.
Circumstances that could trigger the accelerated death benefits provisions include the onset of life-threatening or catastrophic medical conditions, according to an analysis prepared by the Michigan House of Representatives staff.
The House voted 108-0 to pass a slightly different version of the bill in early October.
The model for the bill has been around since 1990, and many states have long since passed a similar bill, says Carrie Hartgen, legislative director of state regulations for the American Council of Life Insurers, Washington.
The model was created in response to the AIDS crisis, Hartgen says.
“Michigan is not doing anything new,” Hartgen says. “It’s a consumer protection that legislators are looking at, giving consumers one more way, in the event that they do have a health crisis, to use their valuable life benefits.”
Currently, the Michigan code includes within the definition of “life insurance” a policy “which prepays in a lump sum not more than 25% of the death benefit based on one or more?medical conditions if considered to be life threatening or of a catastrophic nature,” the House staff says.
If H.B. 4907 is enacted, these provisions would be eliminated and replaced with more extensive provisions regarding accelerated benefits. The definition of “life insurance” would simply describe the product as “insurance [that] prepays the death benefit,” according to the House staff.
The result would be the removal of the 25% limitation on early death benefit payouts and an expanded set of “qualifying events” that would make accelerated benefits available, the House staff says.
Links to the text of the bill and other information about the bill are on the Web at http://www.michiganlegislature.org/mileg.asp?page=getObject&objName=2003-HB-4907